Borderlands: 3 Texas seaports awarded $37M in federal upgrade grants

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Three Texas seaports are awarded a combined $37 million in federal upgrade grants; Arcadia Cold Storage opens a Phoenix-area facility; an investment firm acquires California-based Source Logistics; and Fictiv opens a facility in Monterrey.

3 Texas seaports awarded combined $37M in federal upgrade grants

Three major seaports across Texas will receive almost $38 million in federal funding aimed at speeding up supply chain operations and improving trucking capacity.

The awards in Texas are part of $653 million in grants to upgrade and expand 41 coastal and inland ports announced by the U.S. Department of Transportation on Friday as part of the government’s annual round of funding under the Port Infrastructure Development Program.

Port Freeport, about 60 miles south of Houston along the Gulf of Mexico, will receive nearly $16 million to expand its Velasco Terminal.

The expansion includes the construction of a 36,900-square-foot cross-dock warehouse and a new terminal access truck gate.

“The cross-dock facility will enable cargo to be unloaded, sorted, and loaded onto trucks without interfering with other terminal traffic, reducing congestion,” DOT said in a news release. “The warehouse design improves safety by incorporating wider maneuvering, loading, and aisle-way space for forklifts, which will reduce hazards for forklift operators and warehouse workers. The new truck gate will reduce truck turn times to improve productivity and enhance safety by adding truck lanes off the adjacent roadway.”

In June, Port Freeport completed the expansion of its Velasco Container Terminal, aiming to transform the port into a regional shipping hub by accommodating larger container and tanker vessels, officials said.

Port Freeport is one of the leading exporters of crude oil and natural gas liquids in the country. More than 1,189 vessels called Port Freeport in 2022, transporting 31.2 million tons of freight.

In addition to the expansion of its Velasco Terminal facilities, the port is undergoing a widening and deepening project for the Port Freeport Ship Channel. The $295 million project, of which the federal government is chipping in $165 million, includes deepening the Freeport channel from a depth of 51 feet to 56 feet. The project is scheduled to be completed in 2025.

Port Freeport is one of the leading exporters of crude oil and natural gas liquids in the country. (Photo: Port Freeport)

In Baytown, about 26 miles east of Houston, the Cedar Port Industrial Park will receive $10.9 million to expand the dock and channel near the facility, while also adding a heavy-haul road connecting the barge dock to the park’s tenant area.

Spanning 15,000 acres along the Houston Ship Channel, Cedar Port Industrial Park is one of the largest master-planned rail-and-barge-served industrial facilities in the U.S.

The Port of Bay City will receive $9.9 million for its West Basin Bulkhead Project, which will construct a 400-foot-long bulkhead and an associated paved cargo dock and loop road for truck access. The port is located about 80 miles southeast of Houston along the Gulf of Mexico.

Arcadia Cold Storage opens Phoenix-area facility

Arcadia Cold Storage and Logistics recently opened a 293,000-square-foot temperature-controlled facility near Phoenix.

The cold storage facility offers a convertible freezer and logistics center with 40,500 pallet positions designed to support a combination of regional distribution, import export activity and high-volume throughput handling services.

The site will serve as a hub for the Southwest, with access to metropolitan markets in Southern California, Arizona, Nevada, Utah, New Mexico and Colorado.

Arcadia Cold’s new facility will serve as a hub for the Southwest region. (Photo: Arcadia Cold)

“The facility represents our westernmost site to date and will satisfy our customers’ need for a well-designed and operated building to help manage their product storage and handling requirements,” Arcadia Cold CEO Chris Hughes said in a news release.

Atlanta-based Arcadia Cold Storage and Logistics also has cold chain centers in Texas, Pennsylvania and Georgia.

Investment firm acquires California-based Source Logistics

New York-based Palladium Equity Partners has acquired a majority stake in Source Logistics, a Montebello, California-based provider of warehousing, distribution and third-party logistics services to the consumer goods sector, with a focus on Hispanic food and beverage brands.

Terms of the financial transaction were not disclosed.

Founded in 1999, Source Logistics serves its customers from 12 facilities across the country, including in California, Texas, New Jersey and Oregon. The company imports products from Mexico, along with Central and South America.

Officials for Palladium said the investment in Source Logistics broadens their reach in the Mexican food and beverage value chain. Palladium is an investment firm with more than 200 companies in its portfolio.

“Our firm has invested over $1.3 billion in the U.S. Hispanic market across consumer, healthcare, services and industrial sectors,” Daniel Ilundain, co-head of Palladium’s flagship funds, said in a news release. “Source Logistics represents Palladium’s 20th platform investment addressing this rapidly growing demographic that accounts for $3.2 trillion in gross domestic product.”

Fictiv opens custom manufacturing hub in Monterrey

Fictiv, an operating system for custom manufacturing, recently opened a facility in Monterrey, Mexico, aiming to offer more options for on-demand manufacturing services across North America.

The manufacturing hub in Monterrey provides customers with added manufacturing capacity, supply chain options and agility in meeting product development needs, officials said.

“Mexico is an incredibly exciting region for manufacturing growth, full of untapped potential,” Dave Evans, co-founder and CEO of Fictiv, said in a news release. “We’re thrilled to leverage our digital platform and supply chain management excellence to connect our U.S. customers with Mexico’s premier manufacturing talent and vice versa.”

In addition to Mexico, Fictiv also has operations in the U.S., China and India. San Francisco-based Fictiv was founded in 2013. The company has manufactured more than 20 million parts for both early-stage companies and large enterprises.

Click for more FreightWaves articles by Noi Mahoney.

More articles by Noi Mahoney

Trimble’s transportation revenue jumps 35% in Q3

US mulls terminating tomato trade agreement with Mexico

Universal Logistics’ Q3 earnings decline in ‘sluggish freight market’

Binford, North Dakota Post Office 58416

The Binford, North Dakota Post Office serves ZIP Code 58416. Photo by Jimmy Emerson, some rights reserved. Photo shared under the Creative Commons License.

Binford Post Office
215 Whinery St
Binford, ND 58416

Location at Google Maps

Key US lane shows soft freight market still vulnerable to shipping imbalance

Chart of the Week: Spot and contract rate (including fuel) – Chicago to Atlanta SONAR : Market Dashboard

The spread between truckload contract and spot rates has contracted significantly in one of the most densely traveled lanes in the U.S. — Chicago to Atlanta — according to the FreightWaves Trusted Rate Assessment Consortium (TRAC) and database of invoice data. It shows that while the domestic transportation market continues to be in an extremely oversupplied state, there are small signs that it is not as loose as it has been.

Transportation service providers continue to struggle in what has been an extremely competitive environment since Q2 of 2022. Spot rates plummeted in the spring last year from all-time highs, but contract rates, as is their nature, fell much more gradually.

The general rule is that contract rates follow spot rates as they are negotiated with a much slower cadence and are locked in place for longer periods of time, normally a year. There has been little indication from the spot market that contract rates will stop falling, but looking into smaller lane-level granularities, this is less true.

At a high level of aggregation, contract rates remain extremely elevated from a historical perspective in relation to spot rates. The chart above shows the average rate for dry van contract and spot loads moving more than 250 miles excluding fuel charges in the U.S. Contract rates are currently ~34% higher than spot rates.

To put this in perspective, contract rates averaged about 10-15% lower than spot rates in the historically tight late-2021 market and were around 15% higher than spot rates in the fall of 2019, when conditions were very loose. The current relationship paints a very soft picture.

The Chicago-to-Atlanta lane is considered a backbone lane in the domestic freight market. Thousands of loads a day move between these two markets. Both markets represent high levels of consumption, being large population centers, and production.

This lane should be one of the more well covered in the nation, yet the imbalance in the flow of freight has pushed spot rates gradually higher over the past four months. Contract rates (including fuel) were ~22% higher than spot rates at the beginning of July this past summer. At the end of October that gap had shrunk to 6%.

One of the big reasons for this is the growth in demand out of Chicago has outpaced Atlanta. Outbound tender volumes for the Chicago market averaged ~8% above summer levels in October, while Atlanta’s daily tender volumes were ~6% lower on average.

The reverse trip shows the inverse is also true, with spot rates falling off summer peak values moving from Atlanta to Chicago. These rates reflect a traditional headhaul and backhaul relationship emerging between these two markets. The headhaul, or outbound-heavy lane, is Chicago to Atlanta, while the backhaul, or inbound-heavy lane, is Atlanta to Chicago.

The point of all this is that even in a market of abundant capacity, imbalances are still occurring under the surface that are difficult to see. Some of these imbalances are temporary or seasonal, while others represent longer-term shifts in domestic freight patterns. Identifying these patterns and relationships are key to navigating the volatile freight market and forecasting for the next year.

Chicago’s outbound tender rejection rates have also increased (from under 2% to 3.3%) but not to a level that would be alarming to anyone. While most shippers do not see or feel this slow shift to a tighter environment, most know it is coming.

It does appear that both spot and rejection rates are starting to fall back in early November out of Chicago. With capacity still being abundant, imbalances like this tend to get ironed out. But this is definitely one more sign that the freight market’s loosest days may be in the past as capacity continues to exit at a record pace. And we can see it in action in this lane.

About the Chart of the Week

The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.

SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time.

The FreightWaves data science and product teams are releasing new datasets each week and enhancing the client experience.

To request a SONAR demo, click here.

Pennsylvania brokerage lays off nearly 65 employees, sources say

Approximately 65 employees for Pittsburgh-based Elite Transit Solutions were laid off via Microsoft Teams on Friday. This is the second round of job cuts the freight brokerage has experienced over the past month; about 20 employees were let go on Oct. 20 because of the “current economic situation,” according to sources familiar with the layoffs.

One former employee who was fired on Friday’s call told FreightWaves that Elite Transit Solutions’ CEO Michael D. Johnson didn’t allow workers to submit questions using the chat function and muted their microphones so they weren’t able to ask questions. After the call ended, their computer access was cut.

“We all had questions about when we would get paid for working these last two weeks and if we would get paid for our vacation time we had accrued,” the ex-employee, who asked to remain anonymous for fear of retaliation, told FreightWaves. “We were told to email human resources if we had any questions, but our [vice president] of HR left a day before we found out our jobs were being eliminated. Who is left to respond to our emails?”

Melissa Bucci, former vice president of people and culture at Elite Transit Solutions, confirmed the layoffs via LinkedIn on Friday, stating that she was sorry she didn’t “have an opportunity to say goodbye.”

At its peak, the company had around 140 workers, another source familiar with the layoffs at Elite Transit Solutions told FreightWaves, but is down to around 10 people, including Johnson.

Headquartered in Pittsburgh, Elite Transit also has offices in North Carolina, Chicago and Arizona.

The company hasn’t announced it is ceasing operations and is in “talks with another freight brokerage about a possible merger,” according to multiple sources.

“At this point, we aren’t sure what is true and what is not, but the writing has been on the walls for months that Elite hasn’t been doing well and is struggling to secure financing and pay carriers,” the source said.

While Johnson, who founded the logistics company in 2013, initially agreed to speak with FreightWaves about the ongoing financial situation at Elite Transit Solutions, he later declined to comment.

Some carriers haven’t been paid since May

One former employee said he became aware of Elite Transit Solutions’ shaky financial situation soon after he was hired. He said nearly 80% of the inbound calls were from trucking companies that hadn’t been paid for loads they hauled for the brokerage since May or June. They were instructed to transfer the calls to the billing department, which went to voicemail, but claimed that no one answered the phones.

“We were cut off by almost every factoring company you can think of,” the ex-Elite Transit employee told FreightWaves. “It got so bad that the factoring companies were taking money back from the carriers because the contract was between the factoring company and the carrier, not with Elite.”

“We heard from carriers that were forced to close their trucking companies, including one that had to sell his business and his home, because we hadn’t paid him,” the source said. “We received an email from the wife of a carrier owner whose husband attempted suicide and blamed Elite for not paying him.”

Carriers have been posting warnings about payment issues with Elite Transit Solutions since May.

Elite Transit Solutions also urged independent trucking companies to use its “preferred factoring partner,” Connect Capital LLC, headquartered in Miami, writing on its website that “in most cases, Elite drivers get paid in less than 24 hours.”

The business address for Connect Capital is listed as a townhome which was purchased by Johnson for nearly $2.2 million in March 2022. Johnson, who is listed as the only authorized member for Connect Capital. The Florida secretary of state’s office filed to have Connect Capital administratively dissolved for failing to file an annual report in September.

“Why did they continue to hire people knowing they were on shaky ground,” the source said. “These recent layoffs have put the livelihoods of several people and their families in jeopardy.”

Do you have a news tip or story to share? Send me an email or message me @cage_writer on X, formerly known as Twitter. Your name will not be used without your permission.

Senate approves bill to help vets get CDLs

WASHINGTON — The U.S. Senate has approved legislation aimed at making it easier for military veterans to obtain a commercial driver’s license.

The Veteran Improvement Commercial Driver License Act of 2023 was discharged from the Committee on Veterans Affairs and considered and passed by the full Senate by unanimous consent on Thursday.

The legislation, backed by the American Trucking Associations and the Commercial Vehicle Training Association, removes a two-year waiting period currently required for certain CDL schools that veterans may want to attend and pay for using their GI Bill benefits.

Under current law, the U.S. Department of Veterans Affairs is barred from approving CDL courses offered at secondary branches of an educational institution if the branch has been operating for less than two years.

The legislation removes that barrier by allowing the VA to approve a CDL program for veterans at a new branch as long as it is appropriately licensed by the state and uses the same curriculum as the program at the primary institution that has previously been approved.

An identical bill introduced last year in the U.S. House of Representatives is getting more scrutiny.

During a House veterans affairs subcommittee hearing on Thursday, Joseph Westcott, legislative director for the National Association of State Approving Agencies, warned that the legislation in its current form — which is identical to the Senate version — “sweeps away veteran protections” provided by the two-year waiting period.

The waiting period, he said, is meant to prohibit veterans from enrolling in low-standard, fly-by-night truck driving schools by giving the branch school enough time to demonstrate it is stable and has a quality curriculum.

“This bill, as presently drafted, only requires that an institution offer the same curriculum as a previously state-approved institution anywhere in the nation,” Westcott said. “A truck driving school could request immediate approval of a ‘branch’ campus anywhere in the nation, and the [state approval agency] of jurisdiction would have no records (graduation rate, CDL pass rate, or job placement) to determine the approvability of the program.

“If we don’t safeguard that, then we would be in the situation where somebody could get approval in the state of Idaho, and now the two-year rule is effectively swept away in North Carolina. That’s concerning to me.”

But subcommittee Chairman Derrick Van Orden, R-Wisc., was concerned that pushback from state approval agencies over the bill’s language could undermine the bill’s passage, especially if it keeps CDL branch schools from being approved that happen to be in another state but are still located close to the primary school.

However, “we’re going to work with you on this,” he told Westcott. “Truck driving is a fantastic job, and if we can get our guys and gals behind the wheel and actively employed it would be fantastic.”

Click for more FreightWaves articles by John Gallagher.

Machine learning makes extended visibility options a reality

Basic visibility offerings have evolved from perks to table stakes over the past several years. More advanced and in-depth solutions, however, are not so commonplace. Visibility mainstay project44 recently rolled out a number of enhancements to its Movement platform, creating extended visibility options for its customers.

These next-level offerings are powered by machine learning and they have the power to change the way logistics companies operate altogether.

“While many providers offer basic modal visibility, shippers adopting these solutions find themselves still grappling with costly blind spots as shipments transition between modes and carriers. Poor data quality from carriers only exacerbates the issue, resulting in hundreds of billions of dollars in avoidable supply chain costs,” Jett McCandless, founder and CEO of project44, said in a recent news release. “project44’s cutting-edge, machine learning-powered solutions provide the sophisticated insights organizations need to transform their supply chain from a cost center into a competitive advantage.”

By providing door-to-door visibility capabilities — and paving the way for stronger connections between industry players — project44 can help shippers and logistics service providers move from reactive to proactive.

Extended Ocean Visibility

Shippers and service providers moving goods internationally have had limited visibility options for multimodal moves when landside moves aren’t booked by the ocean carrier.

project44’s new Extended Ocean Visibility solution can merge data streams from customers’ carriers and freight forwarders to deliver a single source of truth for inventory in transit, eliminating costly blind spots and delivering visibility from door to door. Since Movement connects shipments to orders with SKU-level granularity and custom references, p44 customers can track their goods in transit by the references that matter most. 

Extended Air Visibility

When moving goods via airfreight, there isn’t much room for error, and these shipments tend to be high value and urgent. Shippers need visibility that enables them to proactively manage exceptions and rightsize inventory so they can reduce costs and provide a differentiated customer experience. Visibility has long been a challenge for these shipments, however, especially for pre- and on-carriage portions since they change hands so quickly and are operated by freight forwarders.

Extended Air Visibility from project44 enables real-time tracking from door to door by unifying data from multiple sources — including freight forwarders — into a single platform, increasing confidence in air shipment arrival. This level of visibility delivers significant value to global shippers like Alcon, a multinational vision care products provider.

“Extended Air Visibility from project44 gives us the real-time tracking capabilities we need to provide a great customer experience every time,” said Alcon’s Curt Metzler.

Extended Truckload Visibility

As shippers and service providers increasingly seek to optimize supply chain costs, intermodal transportation has become a preferred choice due to its cost-effectiveness and eco-friendliness. However, the lack of direct collaboration with rail and short sea operators often leaves shippers in the dark about their shipments’ status.

With Extended Truckload Visibility from project44, customers simply create a single shipment in project44’s Movement platform to gain access to crucial information such as real-time shipment status, estimated time of arrival at the destination and milestone events indicating mode transfers. This means companies can benefit from cost-efficient and eco-friendly shipping while staying connected every step of the way with domestic intermodal visibility.

project44’s innovative machine learning technology offers shippers and logistics service providers a visibility experience that exceeds what most industry leaders thought was even possible.

Click here to learn more about project44.

Shared truckload creates pathway to efficiency for enterprise shippers

A grey tractor pulling a white dry van trailer on a highway

As the trucking industry continues to slog through its toughest downturn since the 2008 financial crisis, analysts have pointed out a slow shift in market trends. Hard-hit carriers have been buoyed by these glimmers of hope in recent months, but the timing of a true market upswing remains difficult to pin down.

This much-anticipated market shift is likely inevitable, although its timing and shape is still unclear.

Some experts expected to see a significant rate jump by the fourth quarter of 2023, but high-frequency data housed in FreightWaves SONAR paints a different picture. In a recent article, FreightWaves CEO Craig Fuller pointed to SONAR’s Carrier Details Total Trucking Authorities index to shed some light on the ongoing freight recession.

In short, Fuller found that — if the current rate of trucking company closures continues — it will take another 78 weeks for capacity to be back in line with historical norms.

“While it is possible that freight rates could increase in anticipation of a capacity reset, FreightWaves and many other analysts don’t believe that freight rates will increase until at least the second quarter of 2024, and few predict large increases in rates even then,” Fuller said.

This environment of uncertainty has made it difficult for shippers to navigate their RFP processes this bid season. Because it is difficult to forecast how rates will move throughout the next 12 months, running bids right now leaves shippers in a precarious position; if forecasts do not hold up, new RFPs could be rendered effectively useless in record time.

It is crucial for shippers to build flexibility into their transportation plans. This ongoing volatile environment has created an opportunity — and a necessity — for companies to take another look at how they move freight.

Fortunately, a slew of forward-looking industry partners have entered the market in recent years, offering shippers more ways to cut waste and boost efficiency than ever before. Flock Freight, for example, is laser-focused on revolutionizing the way shippers handle partial truckloads, creating an avenue for previously unimaginable savings.

Flock Freight offers shippers a shared truckload solution, powered by patented technology, that allows shippers to take advantage of the reliability of truckload while only paying for the space they actually use in any given trailer.

This model offers shippers a layer of nuance and flexibility that has been missing from the industry for decades. In order to take advantage of it, shippers — particularly large shippers — need to approach their operations with a sense of curiosity and collaboration.

Historically, enterprise shippers have not been in the habit of tracking pallet count. Their technologies — including TMS and ERP setups — are often not even equipped to capture pallets and dimensions.

“For large enterprise shippers, a lot of the roadblocks [to savings] come from the operations side of the business,” Todd LaFond, vice president of strategic partnerships at Flock Freight, said. “Most companies don’t know the number of pallets they need to move until an order is actually picked and loaded on their dock.”

At that point, freight that fits within the company’s less-than-truckload parameters is loaded onto a drop trailer. Orders that exceed those parameters are moved via truckload — no matter how much empty space is left in the trailer.

This creates an environment of rampant inefficiencies evidenced by wasted money and unnecessary greenhouse gas emissions. For shippers that want to stop paying for empty space, Flock Freight is ready to step in and help them figure out how to visualize pallet counts and reduce waste.

“As a rule, our core value proposition to most companies that are shipping suboptimal truckloads is that we are able to provide up to 20% cost savings over full truckload rates,” LaFond said. “From a service perspective, our service will be closer to full truckload than to any LTL provider.”

Savings vary from customer to customer and load to load. Because shippers only pay for the space they use in a trailer, those that need less trailer space will naturally save more money. Flock’s machine learning technology plays a pivotal role here by working tirelessly behind the scenes to search the over 1.2 trillion ways to pool their shipments, evaluating over 5 million candidate pool routes, and ultimately finding 5,000 efficient pooling opportunities in near real-time.

Beyond the cost savings realized by switching from partial truckloads to shared truckloads, shippers that move their LTL freight over to a shared truckload model enjoy serious service gains — and decreased damage claims — at a reduced rate compared to full truckload.

“The more open customers are to alternative solutions, the greater their potential for savings,” LaFond said.

Click here to learn more about Flock Freight.

How PSPs lead to better data-driven decisions – Taking the Hire Road

Jeremy Reymer, founder of DriverReach, is joined by a great industry friend and ally, Yvonne Glover. Glover serves as the director of operations at Tyler Technologies, an organization that builds solutions aimed at helping the public sector operate more efficiently.

About 97% of large government agencies use Tyler Technologies’ solutions, according to the company’s website. The Federal Motor Carrier Safety Administration is one of those agencies. The company was contracted to help FMCSA build and manage its preemployment screening program (PSP) from the very beginning.

“We are focusing on problem-solving — helping the government to help constituents,” Glover said. “We are looking at how to help the government access data.”

The FMCSA preemployment screening exists to help carriers decide whether driver candidates are a good fit for their organizations. While hiring managers must access each applicant’s motor vehicle record, the accuracy, timeliness and completeness of these records can vary widely by state.

The PSP is designed to complement motor vehicle records, giving managers a more comprehensive view of each applicant’s strengths and weaknesses. The screening report — which is updated about every 30 days — provides five years of crash data and three years of inspection data for each driver, regardless of state.

Glover noted that the PSP was not created to make decisions for hiring managers, but rather to support hiring managers in their decision making. That means a carrier can still decide to onboard drivers with negative marks on their PSPs. In this case, the data helps carriers customize training opportunities for each new driver.

Most folks talk about FMCSA preemployment screening in relation to its ability to benefit drivers. The PSP is also designed to help drivers, however. In fact, PSP Monitoring is a driver-specific program that alerts participants to any changes to their files — free of charge.

Drivers can request their own records at any time — whether they received a monitoring alert or not — to check for accuracy, keep an eye on their performance and see how they are coming across to hiring managers.

“As a driver, I would want to know what other folks are seeing,” Glover said. “I would want to ensure it is accurate.”

By signing up for PSP Monitoring and keeping tabs on their performance records, drivers can address any inaccuracies before they come up in a job interview.

Click here to learn more about Tyler Technologies.

Death by a thousand cuts

This week’s FreightWaves Supply Chain Pricing Power Index: 30 (Shippers)

Last week’s FreightWaves Supply Chain Pricing Power Index: 30 (Shippers)

Three-month FreightWaves Supply Chain Pricing Power Index Outlook: 35 (Shippers)

The FreightWaves Supply Chain Pricing Power Index uses the analytics and data in FreightWaves SONAR to analyze the market and estimate the negotiating power for rates between shippers and carriers.

This week’s Pricing Power Index is based on the following indicators:

Withering on the vine

Ocean carriers are eyeing 2024 with no small amount of wariness, as the consensus seems to be that the waves will be choppy. Of course, the cargo handled by ocean carriers and container ports directly informs volume trends of the truckload market. Domestic manufacturers are also failing to inspire much optimism, as they foresee that a challenging interest rate environment will continue to be a major headwind on output throughout the first half of 2024.

*Tender volumes are finally, but barely, above year-ago levels*:
*SONAR: OTVI.USA: 2023 (white), 2022 (blue) and 2021 (green)*
**To learn more about FreightWaves SONAR**, ***click here***.

This week, the Outbound Tender Volume Index (OTVI), which measures national freight demand by shippers’ requests for capacity, is down 1.77% week over week (w/w). On a year-over-year (y/y) basis, OTVI is finally up 0.81%, though such y/y comparisons can be colored by significant shifts in tender rejections. OTVI, which includes both accepted and rejected tenders, can be inflated by an uptick in the Outbound Tender Reject Index (OTRI).

*Accepted volumes are outpaced by 2021 and ’22*:
*SONAR: CLAV.USA: 2023 (white), 2022 (blue) and 2021 (green)*
**To learn more about FreightWaves SONAR**, ***click here***.

Contract Load Accepted Volume is an index that measures accepted load volumes moving under contracted agreements. In short, it is similar to OTVI but without the rejected tenders. Looking at accepted tender volumes, we see a dip of 1.51% w/w as well as a fall of 2.61% y/y. This narrowing y/y difference implies that actual freight flow is still recovering from this cycle’s bottom.

With Friday’s release of the October jobs report came a startling realization that the labor market — what had been one of the strongest pillars beneath a slowing, but not crashing, economy — is on unstable ground. Nonfarm payrolls rose 150,000 in the month, below consensus estimates of 180,000 and nearly half of September’s growth, which was revised down from 336,000 to 297,000. I noted on the last jobs print that these headline figures follow a trend of quiet downward revisions in the months following, so for October’s initial pass to be below consensus is weak indeed.

The overall transportation and warehousing sector lost 12,100 jobs in October, which undid nearly all of September’s gain of 12,500 positions. Of October’s losses, cuts in the truck transportation subsector were a major factor, as the trucking industry lost 5,000 positions in the month. But the biggest blow by far was dealt by the storage and warehousing subsector, which bled 11,400 jobs in October. As the warehousing industry faces headwinds going into 2024, so also does the trucking industry.

*Large markets post poor weekly performances:*
*SONAR: Outbound Tender Volume Index – Weekly Change (OTVIW).*
**To learn more about FreightWaves SONAR**, ***click here***.

Of the 135 total markets, 55 reported weekly increases in tender volumes, with many of the heavyweight markets facing slight or severe losses on a w/w basis.

The razor’s edge

After a dramatic peak early last month that brought OTRI to its highest reading since January, tender rejections have returned to the path of mediocrity. As with spot rates, mid-May’s lows likely mark the bottom of this cycle. Unlike spot rates, however, the recent movements in national rejection rates do not have a significant impact on carriers’ sentiment — for them, tender rejections are at a good level, a bad one or a middling normal. Unfortunately, with OTRI below 4%, low rejection rates are still a heavy counterweight to carriers’ pricing power.

*OTRI’s recent gains are quickly lost:*
*SONAR: OTRI.USA: 2023 (white), 2022 (blue) and 2021 (green)*
**To learn more about FreightWaves SONAR**, ***click here***.

Over the past week, OTRI, which measures relative capacity in the market, fell to 3.46%, a change of 6 basis points from the week prior. OTRI is now 113 bps below year-ago levels, with comparisons becoming less favorable as rejection rates slide deeper into contraction.

More news of bankruptcies came from the logistics sector, a further indication that this bloodletting cycle will be death by a thousand cuts. A 12-year-old brokerage in Fort Worth, Texas, SEL Supply Chain Solutions struggled to overcome a failure cascade that started with the theft of a $700,000 load earlier this year. After the cargo theft was reported to insurance, premiums predictably rose at a time when margins were already being compressed. Finally, the challenging credit environment caused banks to restrict the firm’s access to capital, which is especially damning for brokerages that rely on payments made 30-60 days after a load is moved. In short, this arduous road to freight markets’ recovery will punish brokers and carriers alike for any slight mistake or fluke disruption.

*Capacity tightened in Los Angeles this week*:
*SONAR:* WRI (color)
***To learn more about FreightWaves SONAR,*** ***click here***.

The map above shows the Weighted Rejection Index (WRI), the product of the Outbound Tender Reject Index – Weekly Change and Outbound Tender Market Share, as a way to prioritize rejection rate changes. As capacity is generally finding freight this week, only a few regions posted blue markets, which are usually the ones to focus on.

Of the 135 markets, 59 reported higher rejection rates over the past week, though 43 of those saw increases of only 100 or fewer bps.

Shifting sands

Diesel prices are headed back down after mid-October’s threat of a rally dissipated. The outbreak of war in the Middle East put a brief premium on prices of crude oil, though this fizzled as soon as the Israel-Hamas war appeared to be contained. That said, there are whispers that Saudi Arabia could cut its oil production by another million barrels per day. Such a strategy appears somewhat foolish, given recent Q3 data that revealed — as a direct result of already-curbed production — Saudi Arabia’s economy contracted for the first time since the beginning of 2021. If Saudi Arabia does decide to press its finger further on the scale, there is always the risk that oil markets could become too hot, triggering a recessionary backlash.

*Spot rates hold slight promise of recovery:*
*SONAR: National Truckload Index, 7-day average (white; right axis) and dry van contract rate (green; left axis).*
***To learn more about FreightWaves SONAR,*** ***click here***.

This week, the National Truckload Index (NTI) — which includes fuel surcharges and other accessorials — rose 4 cents per mile to $2.26. Falling fuel prices were unable to offset rising linehaul rates, as the linehaul variant of the NTI (NTIL) — which excludes fuel surcharges and other accessorials — rose 5 cents per mile w/w to $1.57.

It is still difficult to discern the movements of contract rates, which are reported on a two-week delay, for the remainder of the year. Bid season is still ongoing and will continue until Q1 2024, but contract rates have so far remained stable. Even so, contract rates are trending slightly below last quarter’s average, and shippers have plenty of pricing power left to exercise during this round of contract negotiations. For the time being, contract rates — which exclude fuel surcharges and other accessorials like the NTIL — have fallen 1 cent per mile w/w to $2.36.

*SONAR: RATES.USA*
***To learn more about FreightWaves SONAR,*** ***click here***.

The chart above shows the spread between the NTIL and dry van contract rates, revealing the index has fallen to all-time lows in the data set, which dates to early 2019. Throughout that year, contract rates exceeded spot rates, leading to a record number of bankruptcies in the space. Once COVID-19 spread, spot rates reacted quickly, rising to record highs seemingly weekly, while contract rates slowly crept higher throughout 2021.

Despite this spread narrowing significantly early in the year, tightening by 20 cents per mile in January, it has remained wide throughout most of the year to date. As linehaul spot rates remain 81 cents below contract rates, there is plenty of room for contract rates to decline — or for spot rates to rise — in the final quarter of the year.

*SONAR: FreightWaves TRAC rate from Los Angeles to Dallas.*
***To learn more about FreightWaves TRAC,*** ***click here***.

The FreightWaves Trusted Rate Assessment Consortium (TRAC) spot rate from Los Angeles to Dallas, arguably one of the densest freight lanes in the country, is losing some of its recent gains. Over the past week, the TRAC rate fell 4 cents per mile w/w to $2.27 — slipping further from its year-to-date high of $2.39. The daily NTI (NTID), which has risen to $2.27, is now realigned with rates along this lane.

*SONAR: FreightWaves TRAC rate from Atlanta to Philadelphia.*
***To learn more about FreightWaves TRAC,*** ***click here***.

On the East Coast, especially out of Atlanta, rates are facing a brutal decline and are finally being outpaced by the NTID. The FreightWaves TRAC rate from Atlanta to Philadelphia fell 6 cents per mile to $2.19. After a bull run that started at the end of April, this lane had been plateauing well above the national average, which made north-to-south lanes in the East more attractive than West Coast alternatives during the summer.

For more information on FreightWaves’ research, please contact Michael Rudolph at mrudolph@www.freightwaves.com or Tony Mulvey at tmulvey@www.freightwaves.com.

Running on Ice: Frosting the nation with warehouses

Hello, and welcome to the coolest community in freight! Here you’ll find the latest information on warehouse news, tech developments and all things reefer madness-related. I’m your controller of the thermostat, Mary O’Connell. Thanks for having me!

All thawed out

A new cold storage facility in Cleveland has brought immediate relief to cold shippers in the form of Cleveland Cold Storage. The facility has 150,000 square feet of storage that goes to minus 10 degrees. The facility opens early next year and already has over half the space sold.

Orlando Baking Co., one of the new clients of the warehouse, used to ship freshly baked breads and goods to Columbus, Ohio, every day to the tune of 12 trucks because there were no available facilities closer. That’s about two hours one way that food was being transported.

This facility has kicked off more of the same as International Food Solutions is planning to build a $100 million frozen food processing plant just a mile away from Cleveland Cold Storage.

Temperature checks

Cleveland isn’t the only city getting some much-needed cold storage. Baytown, Texas, right outside Houston is getting a new 281,849-square-foot warehouse. The facility will be primarily leased by FreezPak Logistics. Phase one will break ground this month. According to a Fleet Owner article, “This project will be FreezPak’s largest known facility to date and one of the most technically advanced Class A cold-storage industrial facilities within the country.”

Phase two of the project will increase the overall square footage to 547,083. Once both phases are completed, the facility will be able to accommodate 141 trailer parking stalls, 64 truck stalls, three rail bays and 131 car parking spots. On top of that, the building will have 408,213 square feet of freezer space and 110,141 square feet of temperature-controlled cooler docks.

Food and drugs

Thanksgiving leftover sandwiches are a hallmark of the holiday. This year Digiorno is putting a pizza twist on classic Thanksgiving leftovers, introducing the Digiorno Thanksgiving Pizza. It will have turkey, creamy gravy sauce, diced sweet potatoes, green beans and cranberries, topped with mozzarella and cheddar cheese with the all-important crispy onion to finish it off.

According to DiGiorno, “68 percent of Americans dislike a classic Thanksgiving dish, but they eat it anyway out of tradition.” As one of those 68% of people, I can confirm not all Thanksgiving side dishes are created equal. Some food combinations should be left alone, and I’d have to say this might be a miss from DiGiorno.

However, if questionable pizza flavors is your style, this limited-edition pizza can be ordered online for $11.23 along with some themed merch. The pizza is available Nov. 1-22.

Cold chain lanes

This week’s SONAR reefer market is Memphis, Tennessee. October closed out Memphis on a high note with the Reefer Outbound Tender Reject Index coming in 23.46%. Since reefer rejection rates have jumped over 20%, spot rates in Memphis will be significantly inflated compared to where they were in October. Not only are reefer rejections on the rise, but reefer outbound tender volumes are up 25% week over week.

Shippers should expect to see an increase in spot rates in Memphis, as service from main carriers might take a hit. Carriers with excess capacity should think about heading to Memphis, and brokers should expect volatility in rates over the next few weeks until rates return to stability.

Is SONAR for you? Check it out with a demo!

Shelf life

Daimler Truck electric truck brand RIZON has achieved full homologation in the US

Cruz Foam’s Cruz Cool Named to Time’s List of the Best Inventions of 2023

Outdated cold store facilities — Climate Control News

US holiday spending to climb 3%-4% over 2022, NRF predicts

Increased consumer spending not enough to end trucking bloodbath

Wanna chat in the cooler? Shoot me an email with comments, questions or story ideas at moconnell@www.freightwaves.com.

See you on the internet.

Mary

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